From Financial Struggle to Short-Term Financial Relief – An Exploratory Study on Small-Dollar Lending for Low-and Moderate-Income Employees

In this study, we examined HoneyBee, a service company that provides access to 0% APR loans and financial coaching through the workplace. HoneyBee aims to offer employees in need a more affordable credit alternative to payday and auto title loans and therefore help addressing significant cash flow emergencies. Data for this exploratory study included 65 employees who used HoneyBee at least once from August, 2017 through May, 2020, and 199 borrowers who answered a phone survey conducted by HoneyBee from August, 2019 to June, 2020.

Most of HoneyBee users were female, people of color and had low or moderate incomes, who face cash flow issues to smooth consumption. They highlighted the beneficial features of convenience and affordability, noting that the service eased their financial burden to cover expenses and pay bills. This was more common among repeat borrowers than one-time borrowers and more common among those with a lower hourly wage. For these employees, access to HoneyBee loan can help them avoid costly alternatives such as payday loans and car title loans, which many employees reported that they had used before provided HoneyBee or would have used if no HoneyBee service available.